In fact, some of your legal rights especially those regarding finance will be lost because of bankruptcy. The following example explains the process of bankruptcy;
Imagine if you have several bank loans covering your home, car along with credit cards and you unfortunately find yourself unable to cope with the level of debt and unable to pay. Subsequently, the court declared you as a bankrupt and appointed the Director General of Insolvency (DGI) to administer over and sell all your assets to repay your creditors. Leaving Malaysia will be impossible because of your bankruptcy status.
The lack of discipline in financial management unquestionably is the biggest cause for the worrying trend. Most young people have many financial obligations such as credit card debts, high purchase loans (car and housing) and study loan. Their overspending habits on items like branded goods and gadgets make the situation worse. This circumstance has also aligned with a survey done by Federation of Malaysian Consumers Associations in 2013 which revealing 37% of young Malaysians were living outside their means.
The common reason why young Malaysians are being bankrupt is because they are living beyond their means. They are constantly being influenced by their peers to purchase the latest and best items on the market. These peer pressure will affect the youngsters to make bad financial decisions which led them to purchase something that they can’t afford.
The Credit Counselling and Debt Management Agency (AKPK), established by Bank Negara Malaysia provides counselling, debt management and financial education to assist individuals to take control of their financial situation and their services are free of charge. A debt management programme is advised for those who are unable to manage debts. Tailored debt repayment plans will be worked out for individual through negotiations with the financial service providers, after a confidential counselling session.
Bankruptcy could one of your worst nightmare and you will definitely regret it financially. Read our article on how you can be your own financial planner. Here are some articles regarding REITs and how to avoid overspending. To have a better understanding on financial planning, you can read our articles on how to invest RM 10,000 wisely and how to invest one million ringgit in properties.
In a nutshell, being bankrupt can be damaging to you beyond just only affecting your credit rating. Stress, family pressure and social expectations can make you suffer mentally and emotionally. To gain a deeper knowledge on the subject of bankruptcy, do refer to AKPK and Malaysia Department of Insolvency for more information.